go national. go like a pro. welcome back. let's get to larry and lindsey for the last word. >> the bank earnings, half of all their revenue is fee based. that means it's not on the interest side. that means the lending is not going on. we're still at increasingly a low economy. if you buy back the dell, you don't go to the banks anymore. you find other sources of money. i think that the financial story and economic story is saying this is not the kind of financial environment that leads to rapid growth.

>> interesting. >> okay. >> you tied it in to dell and jpmorgan and everything else. excellent. larry, thank you. >> my pleasure. >> join us tomorrow. "squawk on the street" begins right now. good wednesday morning. welcome to "squawk on the street." i'm melissa lee with carl quintanilla, and jim cramer and david faber at the new york stock exchange. stocks had a pretty nice day yesterday. the s&p closed at five-year highs. we are looking to the down decide this morning. the dow looking to lose about 62 at the open. the picture in europe, a couple of downgrades for gdp forecasts from both the german government and world bank. italy is down by 1.5%. road map this morning starts off with the banks and earnings. jpmorgan higher.

goldman sachs at 18-month highs. >> japan airlines grounding their entire dreamliner fleet. dell shares falling this morning after david faber reports that a deal could be announced within two weeks, but at a price of 13.50 or 14 a share, he's got the details. rising food costs taking a bite out of fourth-quarter earnings. shares down there. goldman sachs blowing past street estimates with 560 a share. beating wall street frachts. jpmorgan posting better than expected earnings of 53%. jpmorgan's board cutting ceo jamie dimon's compensation in half to $11.5 million. this following an investigation of the bank's $6.2 billion trading loss.

he respects the board's decision on this pay cut. interesting stories for both of them. of course, both of them a huge impact on the market this morning, jim. >> goldman sachts sachs is a quarter from the old days. people didn't think they could have a big return on equity. this was dramatic. the stocks, tangible book value has been something that hasn't mattered for goldman for a while. i think it's going to start mattering. cash on hand, i think you'll see a tangible book value. compensation for people, really down dramatically. goldman has reined in compensation, revenue's gone up, that's how you make a lot of money. >> the compensation number was higher as their number because revenues were so much higher. but you're right, they took it down to 37 from 2.4. i was surprised at that move down. yesterday's news from morgan stanley not to be overlooked

either. stretching out basically giving people ious. an important way in the way wall street compensates. we'll see if other firms follow through. jpmorgan, you know -- >> it gets up behind you. >> not going to dictate trading at all. >> i think we mentioned the -- >> it's over with. >> when i hear whale now, it's going to be star trek, what, 5? save the whale. this is the beginning, thinking about jpmorgan as a bank, they're a bank, and they don't make as much money as they used to. >> goldman said they would start hunkering down. it seemed like it was a very long time ago. goldman once again, just like the old days, like you said, jim, doesn't have to run faster than the bear, as someone once said. they just have to outrun everybody else. >> i think they did it. if you go line by line, there are divisions that i kind of said, you know, everyone said, forget equities.

equity was very good. how many people do we -- currencies, commodities, that's going to be challenging. >> investment banking revenues were up last year. >> carrying high margins. >> yes, they do. credit products and mortgages. they must be trading a lot of mortgages over there. >> they're not packaging them up and selling them as securities. >> one of the ways they did it was to say, listen, your payout is going to be lower. look at this year over year. gary cohen, blankfein. they invite people to stay and blow them up if they -- you know, if you do a piece of business and it backfired a quarter later, huh-uh, call it back. everything gorman is doing is, i think, back to earth. >> it is a different firm than

goldman. in the old days, if goldman put up a quarter like this -- >> morgan is up this morning. >> i don't know if there's a lot in the conversation there. they don't expect there to be a -- >> morgan stanley went to the ubs model. >> interesting story here. i don't think they're ready to do it. we brought up day one when we saw the ubs shares climb so high, when they pushed out the investment banking. certainly not fixed income. what does morgan stanley do? would they conceivably consider going that route? i don't know they're ready to yet. but this comp plan in some ways -- >> there's a stream going through all these that people shouldn't be fooled at home about. maybe they're not miking as much as they used to. there's still a tale of two cities in this country. i remember somebody yesterday saying warner is going to make more money.

i was like, are you kidding me? they're not going to make what a third-year management director is going to make at goldman sachs. it's still a great opportunity. i know when you talk to young people, they're like, jim, why did you work for goldman sachs? like i worked for a chemical weapons company. third-year m.d., making a lot of money. >> $2 million, $3 million. >> i hope the third year guys are making that. >> or more? >> here's a question. a lot of discussion about whether or not the banks are in better condition because of the regulatory scrutiny in the last couple of years. if you're looking for a real view of the economy and how it's doing, do we have to wait for ge on friday or are banks telling us enough? >> their models are so different. but you know what, apropos of that, one of the things that we had when dodd/frank happened, it's going to kill them. you want to be mr. goldman and mr. sachs, they're killing. >> yeah.

that return on equity was a big number. >> you were talking about 6, 7, you were talking about -- you were saying it was going to be the bank in the billion loans. it ended up being the potter's pack. >> i like that. >> mortgage apps today, the highest since 2011. the 30-year fixed at 361. we haven't seen numbers like that in a long time. >> things are good. somebody said to me, hey, jim, what is cnbc going to do after they solve the debt ceiling? you panicked on the election. >> we'll try something. >> the country, the republic is in repeated crisis. you have a president saying -- he said, okay, what happens if the president doesn't have a crisis after the debt ceiling? what are you going to do if he

says, listen, we're just going to go back to being like washington? that was interesting. >> we can talk about fundamentals. the economy will be picking up. housing likely to get in on it. >> maybe we're actually breaking -- maybe the valuations aren't -- >> based on what? >> come on, under wells fargo? >> michael dell, and suddenly, mr. skeptic -- >> overheated debt market, that's always a good sign for an economy. that's always a sign that things are getting a lot better. >> it's been getting overheated since 1979. >> big lbos. that worked out real well. no, i'm just -- there's housing, sales of pickups. sales of cars in europe for 2012, not so good. we'll talk about that. >> germany, the bmw sales,

volkswagen sales. one of my cousins in mexico is near a bmw, new plant. the germans are down. they're buying like crazy. germany business, good. rest of the continent okay. ford cutting back very dramatically. >> boeing, more problems related to the dreamliner. japanese grounded their 787 for safety checks. the national transportation safety board, faa are going to japan to assess that incident. when the first problems arose last week, week before, we said, we'll notice a seriousing when there's a grounding. we got one, times two. >> yeah. >> by the way, goldman taking out conviction buy list. the likelihood there will be

meaningful changes to the plan. >> the footage is really interesting. forget the name of the company that's flying. it was the pride of the 787. put 787 all over it. i think obviously this is -- boeing is standing by it. it's problematic. i know they can solve it. i keep saying to myself every day, i know they can solve this. but you first have to say, we have a real problem. >> these two carriers are the largest users of 787 dreamliners. you see 787 plastered on the side of the plane and people coming down the chute out of it, that's a risk. you're right, you may love the stock, but it may be tricky to be in there. >> this stock has held at the 74 level for ages. i don't know. remember, if you go look at the phil lebeau indicator, he's about to come on, unless he's with carl, forget it, lebeau

coming in. it's still going. >> you have been pretty consistent in saying there are other ways to play this. >> you go with the koty company, honeywell, breaking out here clearly. they make the cockpit for everybody. there's a lot of other planes being made besides the 787. we're talking about the 8400 planes being ordered. it may put a glitch in boeing. >> it will be interesting to see if they address this issue at all on thursday. >> commercial regional and business jet coming on strong. what i'm trying to do is try to juxtapose the gloom with the fact that business jets are doing well. maybe there's faux gloom. remember donny deutsche, something something new bus, the gloomiest, i don't know, whatever it's called.

>> gloomest of the new green. i'm going to make a t-shirt. >> it's like, actually, i think of it myself. >> cramer's hearing voices again. >> wall street breaking for the last key economic report before the bell. we'll get industrial production in a few moments. also ahead, the buyout talks involving dell. one more look at futures after five straight up days, a little weakness here. obviously concerning a few specific dow components. a lot more "squawk on the street" back at post 9 in a minute.

welcome back to "squawk on the street." december industrial production rose, up .3, exactly as predicted by many analysts and economists. the utilization rate, 78.8. that is definitely stronger than 78.5 expectation. our last look was ramped up from 78.4 to 78.7. so that actually makes the move look only up a tenth. but it's up more considering that revision. and we have national association of home builders, housing market index yet to come at the top of the hour. we find equities under a bit of pressure. and interest rates, once again, moving a little bit lower. melissa lee, back to you. >> thank you, rick santelli. shares of dell moving lower as

more details emerging about the buyout talks emerging about the computer maker. what's striking, david, is so many people on wall street have estimates at what 9 company can be done at. >> it is not going to be 15, at least based on conversations i've had. details hard to come by until late yesterday. my sources indicating between 13.50, let's call it, and 14. that could change. but i think 14 certainly seen as the ceiling amongst the people i've spoken to involved in various parts of a complex deal, one driven by both the private equity firm of silver lake and more importantly by the man himself, that is michael dell. who will not only roll his 15-plus stake into any leverage buyout, but i am told as well will access fresh cash that he has outside of dell. not clear how much. to also aid in the equity raise, if you will. that equity raise had been a key question that i certainly had

raised the math that it appeared they would have at least $4 billion, to $5 billion. closer to $2 billion. they're going to be repatriating cash. people say, how can you do that? you'll pay a big tax. well, apparently the repatriation is a lot more doable than they're being given credit for. i don't know exactly what that means, we'll bring it back once we do the lbo. the big question is why current management considered buying back stocks. there's a special committee here, of course. we'll see whether they can get to a price that every side agrees on and that shareholders will approve. >> yesterday, most of the day was spent pooh-poohing this deal. because of the repatriation. because of the equity check. >> it seemed to be insurmountable because the club deals are frowned upon at this point. >> then i want to ask you whether this is some sort of sea change. because this is obviously a much

smaller check. yesterday we said it would be $8 billion. >> no, $4 billion to $5 billion. >> what i'm saying is, this is a rival departure from what we've seen from the little money put up. >> given the size of the hlbo - >> top line doesn't matter. this company's bottom line is larger than the top line. >> the other thing is, you've got credit markets that are incredibly generous right now. and in speaking to bankers involved in the money-raising itself, roughly perhaps as much as 15. they're saying it's not going to be a problem. they've been getting a lot of incoming phone calls. we've got a lot of the money that we talked about moving to the high yield funds. they want to put it to work. that's an important component of this as well. on both fronts yesterday where i was raising serious questions about how is it doable?

in the equity check, by the way, silver lake is going to find another investor as well. but it's a lot more doable. on the debt front it certainly seems that it will be -- >> will the shareholders revolt? that they demand that the deal be taken a look at? 80% -- 80% to 90% of their cash is overseas and they're willing to bring it back to this. is there a chance they might say, you know what, this deal is a no go. and -- >> absolutely. my expectation is it will be put to a vote. you'll have a special committee negotiating on behalf of the shareholders with michael dell and his bankers and his private equity partners. we'll see where they end up in terms of price. but you raise a good point. they will argue the unaffected stock price is $9.50 a share. that's where the stock was. >> right. >> they'll say, hey, 13.50, 13.70, i don't know what the

number's going to be, that's a big premium on 9.50. >> who has a great balance sheet. new management. better than old management, with a lot of cash overseas. what is it selling for? >> i don't know. >> yahoo! >> oh. >> why would yahoo! not take a page from del. yahoo! should do the same thing. you have to make a change. people forget, this is a blueprint for other companies that have a huge amount of cash overseas with a very good balance sheet. they sort of lost their momentum versus others. yahoo comes back and says, we're the now facebook. i think yahoo -- listen to me -- >> i love when you talk transformational deals. >> don't you love it? >> earnings season is heating up, and so is cramer, as you can tell. we'll see what he has to say about a couple of stocks in the

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except for -- chipotle inflation. i did not like the gross margin. you can say chipotle is just another restaurant. and if that's the case, it's cheaper. but keep in mind, this is really just a bad number. it's just a bad number. >> william blair said no credible evidence of new competitive pressures. just people getting used to it? >> yes. i think that the gloom is off. not that i want to go on the blooming onion. i'm not recommending a regular restaurant chain. you know what, the restaurant business is just okay. we see it over and over again. this is no longer the exceptional story. >> let's talk facebook. got discussed a lot yesterday. >> i thought this was a great idea. i use yelp, okay? when i use yelp, i feel like the top five recommendations are

schils. that buddy is a buddy of the chef, or the inkeeper. what are your friends saying about going to the chipotle? i like this. this is the beginning of what i think is a terrific way to be able to find out where to stay. i was recently in puerto rico. and i would have loved to know where my friends and i should eat. you get these guidebooks? my friends are a better source. i think this was underestimated by wall street. i like the stock. >> we'll talk more about yelp and linked-in and google later on. >> yeah. morgan and goldman, rivals because they're making so much money. >> keeping an eye an apple. has the recent slide created a bargain hunter's delight. the opening bell just a few moments away right here on "squawk on the street."

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gain against the dollar. concern about the strength of the euro overall could be a threat. undercurrent to the u.s., which looks like to be a negative one. >> the big macro, everything out of japan, not so great. but the united states banking story, i think, is as you mentioned, carl, is it a real u.s. economy, what is the read on it. people are doing better. and this is a section that was terrifically performing in the s&p last year. and you could argue, wait a second, it's run ahead. but it's not selling off today. i thought people thought it would sell off. we're not getting that kind of judgment. >> a lot of up moves on the back of goldman sachs earnings.

take a look at the financials. [ bell ringing ] >> taking a look at the open here. no surprise. oh, look, apple is higher by 1.9% in today's session. helping the nasdaq in an up trend. cutting apple to set to perform. a lot of the reasons we heard before, but apple will have bottomed, either yesterday, or today. calling the bottom in shares of apple. remember, on the way up, in september, they're worried about the impending pop on apple.

making the market call right now. >> morgan stanley the risk/reward finally okay. this kills me every day, i don't want to hear from my daughter that itunes is awful. i don't want to hear from people what an idiot i am for bashing apple. it is killing my trust. i want it to go higher. i don't want it to go lower. >> there's no bashing here. >> no. it's like i was mentioning on twitter the other day, that while -- if apple -- people are mad at me that i recommended twitter at 29. twitter's not even public! when you really hate it and put stuff like that -- it's like, i'm sorry for recommending twitter. you bet, you idiot. give me a break. apple, i want it higher. i don't want it lower. >> that was a puzzle. but when they come out and say

high market saturation, are analysts beginning to stretch in why apple should become -- >> am i not to like it? geez, i mean, it's still a real company. i would have sold all of it if i just thought it was a bunch of idiots. >> but it's a wonder. take a look at this dream of downgrades, and price target reductions. i wonder, because all of these things were in place before. the fact that gross ma jins -- that happened with the 3gs. you wonder what all of a sudden right now, you know, you've got to wonder about this. >> i think that's a legitimate question to ask. because people at jim cramer on twitter, many of them, and i hate to use this word, because it's condescending, but there are uninformed investors that buy higher and sell lower. a lot of people bought the web

band because they were going higher. the first tuesday, wasn't it the first tuesday or something? >> it may have been. >> you know what i mean. you've got to understand, like someone said should i buy apple? do you like it because of the earnings, ecau product? that's good. but if you liked it because it was going higher, i think you're being margined out now. what happens with this stock is the people who own it, are people who say, listen, i like a stock that sells at ten times earnings. >> right. take a look at the banking sector. morgan stanley up by 1.5%. morgan reversed to the down side. we had a rocky trading day pre-market. it was trending higher, now it is open at 4575 or so. down 1.25%. >> shares of gm down this morning, almost 5%.

general motors, we got numbers out of europe at the lowest level since 1995. >> car registrations down 8%. in one year. >> right. we really -- overseas, you know, look, we can avoid europe. we cannot talk about it, but they're in a serious recession over there. they're cutting the short rates. it's crazy. in the meantime, jpmorgan, $100 billion in revenues. that's not so bad. >> no. and in fact, let's briefly take a look, if we can, at jpmorgan and move on to comp and goldman sachs as well. what we get from jpmorgan, of course, jim, is a broader context, credit quality overall. we've been watching, if you look through their supplements, the numbers all go in the right direction, the charts all go in the right direction, whether it be on mortgages or credit cards. that's moving in the right direction, of course. loan reserves, releases from

loan reserves. that's not real earnings, but they've been benefiting from that. we're kind of done. mortgages, by the way, a lot of demand for those very mortgages may have helped goldman sachs in terms of its trading and what we've been seeing there at that company. but overall, when you look at the broader barometer of health to the economy, in terms of the ability of people to repay loans, well, it's been going in the right direction for quite some time. >> where is the turn of capital going on this? >> you've got to ask the man who makes those decision, mr. dimon. i would think they would like to. >> we're going to have to start getting back to traditional measures here. what kind of dividends, what kind of growth. remember, we used to do this before the tremendous tsunami. we used to look at bank of america and say, hey, earn $8. >> it's also still up to the -- >> maybe what's happening -- here's a thesis. in 2013 let's say we don't talk

about the government as much. >> i agree. i think that is bound to happen. >> that would be very niles. >> i did want to hit compensation. we have those numbers for you. the comp ratio closely watched. we have at least seeds of activism in some of these financial services world. goldman, morgan stanley. compensation is certainly at the center of a lot of investors' focus. because you can lower it, it goes right to shareholders. there's a look at the ratios. goldman, 37.9%, versus 42.4%. >> and they don't have hedge funds to run to anymore, do they. >> it's a deterrent, though. >> do you ever read the stories about -- i mean, i always want to say who is not wearing a wire? when you dry clean a wire, would it be -- >> i still try to talk to hedge

funds. i really want them to continue to have a conversation which is, by the way, completely and totally allowed. anything you want to discuss with me is fine. people are paranoid now. >> isn't that the point of the government, to make those people completely paranoid? >> yes. >> i remember when i was growing up, bobby kennedy jr., not bobby kennedy -- the real bobby kennedy, excuse me, but bobby kennedy had their goal was to get hopa. now it's to get hedge fund. now the goal is to get hedge fund. they seem to have a good run. >> they have a good track record, when in fact said hedge funds have done something wrong. like on my old show -- >> yeah, i remember that. >> he lost his mind completely, unfortunately. unfortunately. that's a sad story. >> no longer like you can't go

into winefein and saying, i'm going to the hedge fund across the street. he's like, go ahead, i don't care. isn't that great? it's a change in pace. the hedge funds aren't higher. money coming back. and there is no wire. like the wire, one of your favorite shows. >> my favorite. not one of. favorite. >> u.s. attorney. >> take a look of shares at boeing, just to get back on track a little bit. >> sorry. >> boeing shares are down by 3.5%. we're seeing the shares doin. we're back to the levels initially that boeing reached. >> that's interesting. the stock, obviously, it was 74 for the last few. goldman pulled the position.

>> awfully close to a 52-week high. the makers of the lithium ion batteries is a company in japan. publicly traded. ticker is now in our system. obviously the shares of that company have gotten hammered over the last couple of days. i don't know if we have a shorter term chart. >> you fake a look at some of the other suppliers on the u.s. side in terms of parts, pcp, down sharply this morning. these are stocks to watch. like apple suppliers. typically trades along with apple. we're seeing that back with boeing as well. >> i think it's an opportunity by the partsmaker to come in and -- i remember when they bought standard press deal not long ago. they're in every aspect of every plane. cea downgraded yesterday.

i think you don't want to ban anywhere in the aerospace group. >> right. bob pisani has more for us this morning. >> happy wednesday, everybody. a risk off day. most of the big commodity stocks down 1% or 2%. a little bit on the down side mostly for most of the markets, declining topñ advancing stocks. i see goldman sachs at a 52-week high. but apropos of what you're just talking about, they're not talking about jpmorgan and goldman sachs, they're talking about compensation. but hey, that's what the hot topic was last night when i went home. tomorrow goldman and morgan stanley i believe will get their bonuses. they'll find out what their bonuses are. that announcement that goldman sachs -- that morgan stanley was announcing a pay incentive package yesterday really got a lot of people talking about how things are changing on wall street. not necessarily for the better. nobody's shedding any tears for

any of these guys, but it is an issue. remember, those making more than $350,000 a year are going to get deferred bonuses. this is huge for everybody, because i don't know, 60%, 70% of the pay for a lot of these guys are in those bonuses. now you make 250 in pay, 250 in a bonus, now you get a little bit, we don't know how much up front, maybe a third of it, then the other two-thirds gets deferred for the following year. if you leave before that, maybe you don't get that money at all. i know the reasons, obviously, you want to make -- have them make lesk risky bets, tie them closer to the firms, all the things we were just talking about. but the point is, everybody down here, people i was talking to yesterday felt that the morgan stanley model would become the standard model for the street. regardless of whether people are going to make a little bit more at goldman here or not. that's not the point. the morgan stanley model will become the standard model. in february every year, people put down payments on apartments,

you see people buying more cars, people going out a little more. largely on the bonuses. that's all going to change right now. for better or worse, that was the main topic of conversation this morning. let me move on. i got a lot of comments about this gold story this morning. i did a big special on gold a couple of years ago, so i know a lot of people in this business. germ mans a germans are looking to bring some of it back. paris, possibly london. i got comments from people saying, bob, the bundan bank not trusting other banks. bad sign. unhappy with the fiscal irresponsibility of washington, bob. i don't know, guys, i don't think it's any of that. germany moves its stocks here because during the cold war they were afraid of a soviet invasion. that's long since gone. they're not changing that much. germany is the second supplier of gold in the world. they have 45% of their gold supply in the new york federal reserve. they're seeking to repatriate

some of that. to bring it down to 37%. ultimately they want 50% of the gold in frankfurt. right now, only 31% of their gold is in frankfurt. they're bringing a whole bunch back from paris as well. another reason it might be an issue is, it could be expensive. in london they're reportedly being charged half a million euros a year just to store a small amount of gold sitting in a little room. that's not necessarily cheap. i would put aside the conspiracy theories and fiscal ir responsibility. i think this is just a move to bring things pack to where they were a long time ago. 37% of the gold will still stay here in the united states. that's according to a press release from the bundesbaenk. >> does this remind you of operation grand slam in gold favor? grand slam. get that gold out. >> i love that. let's go to rick santelli in chicago. >> i think what you guys are trying to think of is kelly zeros.

we were talking about that on "squawk box." anyway, gold is the topic. everybody finds it fascinating. i wonder if they pay monthly storage rates like when you rent one of those garage spaces. gold is always in everybody's minds. one of the great trades down here. everybody likes to dabble with it. interest rates, not as exciting of a trade. when you look at the two-day charts of 10s and 30s, not big ranges. but there's a pattern developing. it seems rates dip early and come back late. yesterday we were flirting with rates around 180. the fact that we have lower interday two successive days in a row may be important to the technicians out there. the foreign exchange side, today i look at the euro versus the dollar, the dollar doing a little bit better. if you look at the real epicenter trade, look at the chart of the euro/yen, and realize it's not just a little above 117 on monday this week. it was 119.75. let's open up the chart to a couple of years.

ten years, actually, you can see on a big picture, it's just making a comeback. but it's made a huge comeback of late. this is something to pay attention to, especially as the german economy shows signs of slowing a bit. it's the big engine in europe. it's all going to be about exports and cars. germany, japan, euro/yen, pay attention. jim, back to you. >> thank you, rick. energy and metals, sharon epperson is at the nymex. >> brent crude prices moving late bit higher. we got near $111 a barrel. and this on some pipeline issues happening in the brent market. that is impacting that futures price. we're also, though, seeing gains not as strong as you may think, because of the latest report from opec. opec saying it sees weaker demand for its crude in 2013. we're also watching the u.s. supply picture, because that's going to be key going into 1030 when we get the report from the energy department. we are looking at energy prices that have been mixed. but right now we are expecting

analysts to see a big build in crude supply, somewhere around 2.5 million barrels. the american petroleum institute increasing supplies much less than that. we'll see what comes of that number at 10:30. we're also watching the gold story. really, it is platinum that is gaining momentum this year. and the supply issues continue in south africa. hundreds of miners there have gone on strike at anglo american platinum. that is the world's largest producer of platinum. and about 20% of its production will be cut this year, due to some profitability issues. they're trying to work through those. workers very concerned about the conditions there. we'll see what impact that has further in that supply situation. back to you. >> thank you very much, sharon epperson. coming up next, your chance to weigh in on jpmorgan cutting jamie dimon's compensation in half in wake of the london wales trading losses. and speaking out on the debt ceiling showdown. as we head to break, look at the

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the board of jpmorgan cutting jamie dimon's pay by 50% in light of a multibillion dollar loss last year. down from $23 million from the year before. that brings us to this morning's squawk on the tweet. how might jamie dimon tighten his belt. tweet us at squawk street. there's a lot of -- i don't want to say hatred, but ill will toward bankers these days. >> there was one tweet that i saw, that he went from making more in one year than people make in a lifetime to making

more in one year to more than what people make in a lifetime. >> it's the smallest violin in the world playing for him right now, if at all. >> move to washington, work for the government. >> whoa. >> demonstrate his commitment. >> when we come back, apple shareholders weigh in on the company's recent slide. is one planning on adding or subtracting from his position? but first -- coming up, commercial breaks are no time for slacking. wake up, and prepare yourself for jim cramer. 6 stocks in 60 seconds when "squawk on the street" returns. [ male announcer ] you are a business pro.

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earnings season has gone from first year to third. simon is here to tell us what's coming up at 10:00. >> the latest bank reports, and get the latest from boeing in the wake of that 787 emergency landing and grounding of two dreamliner fleets in japan. a jpmorgan shareholder will be

here to tell us why the bank is still undervalued. and why booking a last-minute holiday for the long weekend might be cheaper than you think. hotwire will join us. 6 stocks in 60 seconds, a spin-off of abbott? >> this is the pharmaceutical with a very big yield. i prefer the faster growing medical device which is the old adt. >> mgm. >> the stock is not working today, but the best stock of the group. >> duncan and california? >> moving to california. this stock is not expensive. everyone here thought it was not good anymore. i think it's a buy. >> kellogg's to underweight. >> new management, kellogg's. bringles think they can blow it out. >> the secondary? >> one of my teams is the dollar stores. big secondary. and they still go higher.

what does that tell you about that quarter. >> another downgrade on johnson. >> they're not hurt by this business. i've got to tell you, carl, there are too many analysts who are negative. they say the stock is up too high. what happens if we break out? >> you talked about the danger of downgrades yesterday. >> you know, like i don't like -- i think it was at 65. what do you do? do you suddenly start liking it again? a lot of people fell off the horse. >> what's coming up tonight? >> the ultimate china play is joy global. straightest shooting ceo i know. he'll tell us about electricity demand and coal demand. india, china, i think the stock is a buy. everybody wroe him off at 55. that was a mistake. >> on a day when a lot of people are talking reacceleration. jim, 6:00 and 11:00 eastern time. minutes away from breaking news on home builder sentiment. a hot sector already. a lot more on the earnings showdown between goldman and jpmorgan.

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is turning out to be. welcome back to "squawk on the street." our road map for the next hour, we kick it off with a big bang. jamie dimon taking a pay cut and saying we're at the end of the london whale. how should you play the banks? plus, the president of hotwire is here to tell you the big secret hotels do not want you to know about when booking your next room. >> shares of apple sliding nearly 6% in the last five days. home builder sentiment out. diana olick has the details. >> simon, it is unchanged after seven consecutive monthly change. it holds at 47, which is still the highest level since april of 2006. but 50 is the line between positive and negative. so still not crossing that yet. the builders say it was uncertainty over the fiscal cliff behind the pause, as well as continuing discussions among

policymakers related to spending cuts and the future of the mortgage interest deduction. of the three index components, current sales conditions unchanged. sales expectations over the next six months fell one point. buyer traffic gained one point. home builder confidence dropped in the northeast and midwest month-to-month but gained in the south and took a huge leap out west well in the positive. more online, cnbc.com. kicking off with jpmorgan. holding a conference call to discuss the results, along with the board of the whale report. we're monitoring that now. kayla? >> melissa, the call is still going on with ceo jamie dimon and the new cfo marann lake. we're getting to the questions about the whale, so we'll have more for you on the earnings. big beat on the bottom line. maryann lake saying loan growth, credit trends, et cetera,

they're still taking market share in the investment bank. where they're getting some pressure is on the margins. net interest margin is the ability of the bank to relend out deposits, fell about three basis points. they said they expect that pressure to continue throughout the next year. though deposits will still be growing. we did see that settlement, the big occ foreclosure settlement last week. they said even though they took a $700 million pre-tax charge, they'll safe between $100 million to $150 million a quarter that could have gone into 2014. perhaps the most interesting comments came on the potential for a stock buyback. of course, all banks have submitted their capital returns plans to the federal reserve. and jpmorgan has a $3 billion buyback program for this quarter, but dimon said it's still a good deal to buy back stocks at the current level even though the run-up in the stock has been big, but that they're requesting a smaller buyback from the feds than in the past. the reason for that is because they're trying to get to a 9.5% capital level.

they want to do it quicker. they're sensitive to the stock price. what they're looking for is a smaller buyback. they said the board approved that lower buyback plan and that's what you could see when they release their test test results in march. dimon saying it's been 100% fixed, another man saying it was a big mistake. he's sorry for what happened. there has been too much turnover. of course, we've seen a lot of management changing roles. but the business lines are reorganized in the right place to serve the client, not the product at this point. guys? >> kayla, thank you very much for that. kayla tausche talking about the banks. goldman sachs reporting a blowout quarter. mary thompson takes us through those numbers. >> they were big numbers. fourth quarter gains in the investment and lending portfolio, also strength in debt underwriting and a decline in the amount of money that the company set aside for pay. now, earnings of $5.60 a share were well above analyst estimates. beating forecasts by $1.3

billion. the investment bank's return on equity, measure of profitability jumping to an annualized 16.5%, highest level in almost three years. sustainability is questionable saying it got a boost from the sale of goldman's hedge fund administration business. that lowered comp expense. driving last quarter's returns, 64% increase in banking revenue, underwriting revenue doubled. the 42% increase in revenue was fuelled by a 50% gain, thanks to currencies. revenue from equity trading was up 36%, helped by the sale of the hedge fund business. goldman's investing in lending arm was a standout. due to gains in the investment in china's icdc, $485 million in net interest income and also helping out $789 million in gains from other investments. cost-cutting program helped keep operating expenses flat for the

year, and while quarterly comp expenses fell, they fell. given goldman's revenue 19% this year, it dropped. with the smaller head count for the average payout, or with the smaller hedge count, the average payout per employee this year almost 9% to $399,000. conference call starts at 10:30. i'll be back with highlights.>> thompson. should you be betting on the banks following these earning reports? david, always great to speak with you. >> nice to see you. >> i want to talk to you specifically about jpmorgan. shares down a percent. there are questions at this point, and there have been questions on wall street among analysts about where the valuation is for the company at this point, given the run that the stock has seen. in terms of the levers it can pull in navigating this sort of tough lending environment this

year, do you think jpmorgan still has a lot of upside? even jami dimon on the call talked about buybacks saying they are a pretty good deal at this point, as opposed to a no-brainer before, before the stock had run up. >> it was a very good quarter. the company is hitting on a lot of cylinders. we think that continues into the upcoming year. we would not be the least bit concerned that the stock is pulling off today. the last eight quarters, the company has met or exceeded expectations and still the stock has sold off that day and does better through the quarter. if you like jpmorgan or thinking about buying it, we would buy it on today's weakness. in terms of the stock price, the stock is at 1.2 times book value. jamie dimon typically likes to buy it at one times book value. they had a 15% return on equity. generally a bank that has a 15% return on equity should sell at 1.6 to 1.7 times its book value. we think the stock has a lot of up side. one of the best banks in the country, or the best bank in the

country at nine times earnings. very, very comfortable with it. >> goldman sachs, they had some pretty significant increases year on year when it came to investment banking. >> we like goldman sachs. they're also hitting on a lot of cylinders. that stock sells at a reasonable valuation. if you're inclined to like goldman, we're comfortable owning that here. we have morgan stanley because it's cheaper. we easily think it should sell at 1.2 to 1.4 times the book value. it should be a pretty reasonable to good quarter. more importantly, we think morgan is on the right track and expect better things as the year progresses rather than expecting anything great for this fourth quarter. >> you're pretty bullish morgan stanley already, david, but in terms of the xachange in

compensation, is there an incentive of the shareholders, that maybe the bankers would be apt to take less risks if they're owed money down the road? >> if you look at the last few years, the employees have done particularly well, or pretty well in terms of compensation and the shareholders have not. we think that anything aligns to the employees to the shareholders is a good thing. unless a lot of other firms do the same thing. it could be problematic for morgan stanley but we do think it's a move in the right direction. >> bank of america, merrill lynch had a survey out yesterday. what if investors are overweight banks for the first time in six years. for a long time running, especially for citi and bank of america, they're underowned in those shares. does the overweight bank shares, does that concern you at all, that there may be too many

investors in this trade at this point as banks near the valuations that are the highest in recent history? >> we would want to pay more attention to it. our understanding has been that the mutual fund industry is pretty underweighted in banks. we think more money will come back into banks, that they're overweight in aggregate. the last two years, people's attitude was, why do i have to buy banks, they don't do anything. now that they had a strong 2012, we think the pendulum is going to swing back. you'll have more people rushing into banks so they don't miss the rally. >> david, pleasure speaking with you. thank you for your time. >> no problem. the president set to speak on gun proposals in the next hour. cabela's speaking at the icr conference in miami moments ago on that issue. good morning, courtney. >> good morning to you, carl. at this icr conference, some of the best and most candid conversations come out of the breakout sessions. we just left one. in fact, i believe it's still going on with cabela's.

thomas miller said frankly, the second question asked, we have no earthly idea what president obama is going to announce today when it comes to stricter gun control. but whatever it is, we'll adjust. we'll comply. we're big on compliance. we do not believe it will have a long-term effect on our business. when asked about how current gun sales have been faring, he said, it's our quiet period. we cannot comment on that right % of cabela's business is guns. another 10% is ammunition. only 3% is the assault weapons. he does not believe that the assault weapon ban will make its way through congress. he thinks it will get bogged down in both houses. we asked if he felt pressure to take any of the guns off the shelves in the wake of the newtown shooting, he said very frankly, no. we received no backlash from consumers. they supported us 100%. the competitors who did choose to do so, received a lot of backlash on social media.

we're confident in our decision. >> courtney reagan in miami, where it's more than 80 degrees today. talk to you soon. we'll bring you the president's announcement on gun safety at 11:55 eastern time this morning. ahead on the program, the secret the hotels don't want you knowing about when it comes to booking their rooms. the president of hotwire will join us with the inside scoop. plus, apple had nearly a 6% slide in the past week. so where is the next stop? a longtime apple shareholder will weigh in next on cnbc. [ male announcer ] staples is the number-one office superstore ink retailer in america. now get $6 back in staples rewards for every ink cartridge you recycle when you spend $50 on hp ink. staples. that was easy.

more problems for boeing. nippon saying a 787 made an emergency landing today. grounding their dreamliner fleets. phil lebeau joins us with what is turning into a serious story. >> one that investors are taking even greater interest in, carl. take a look at shares of boeing and what's happening today. not surprising it's under pressure, down a little more than 3% today. these shares have been down in the last week and then they would bounce back. if you look at the chart over the last week, again today, down another $2.54. but as jim cramer pointed out, holding at the $74 level. here's what happened yesterday

in japan. there was an emergency landing on a domestic flight for al nippon airways. there was a warning light that came on in the cockpit. the pilots noticed the unusual smell. some felt it might be smoke. so they made an emergency landing. they said the main battery was discolored and electrolysis solution leaked on the battery. they're investigating it, along with somebody from boeing, the faa, ntsb, they're sending investigators to japan. and now what we have in japan are the two main carriers there, the first carrier is really to take a large number of dreamliners, they've grounded their fleets, at least for today and tomorrow. al nippon as well as japan airlines. 24 dreamliners. that's roughly half of the 50 that we've seen delivered so far by boeing. no flights again today, or tomorrow. here's what the focus is ultimately zeroing in on for the ntsb and faa. remember japan airlines flight that had the fire in boston last

week? this is a battery unit from it. look how charred it is. that's along with what happened in japan on this emergency landing, that's going to be the focus for investigators as they take a look at what's going on with the lithium ion batteries. who makes these batteries? a firm out of japan. if you look at shares of that company, it's under pressure, understandably today. the firm has said they will cooperate with the investigation. and what you have now, carl, is a situat whe do a manufacturing investigation, you look for a commonality of the part that's in question. and now that they have two incidents involving these batteries, that's what they're going to be focused on. >> phil, thank you very much for that. now we raise the question whether modern technology could mean the impact on airlines flying the 787 is more immediate than in the past. joining me now, the president of hotwire, a travel agency a unit of expedia, joining us from san francisco. the truth is now, if you book a flight online, you can immediately see the aircraft

that you're likely to travel in. so is the impact more immediate for airlines? is the risk greater for airlines now than might be flying the 787? >> i think it may be slightly greater here in the next few days, to a week. but also understand that the 787 isn't widely deployed right now. and we're just coming off a year where the airline industry was the safest on record. so we have a lot of good news leading into it right now. i know that our safety agencies and boeing are working really hard to get this worked out. >> we initially booked you on the program to talk about the fact that when we approach this long holiday weekend, a lot of americans, according to a new survey, you have 70% of americans maybe not traveling because they believe last-minute deals are more expensive. and they may be wrong in that assumption. what exactly are you telling people about booking late these days? >> you can save by booking last-minute. especially this time of year. most people don't know that on

any given night in the sufficient, a full one-third of hotel rooms are empty. and hoteliers have incentive to fill those rooms and often willing to discount to do so. >> what sort of deals are you seeing at the moment? >> we see four-star hotel prices in major cities across the u.s. often in a range of $60 to $120 a night, you know, you can usually find a discount between 40% and 60% off what you would pay at retail. >> so it's these dynamics are different now. are hotels holding on to the inventory, really to the last minute because they believe they can still dump them on travel agencies if need be? a different situation of perhaps than five years ago? >> i think every year now the hotels are interested in taking advantage of a healing economy and raising prices overall. that indicates health in their business. and discounting at the very last minute is ironically a way to support that. they can raise prices initially

for those booking further away from their trip, and then if things don't go wrong, if they're not as full as they'd hoped, they can discount via online travel agencies like ours. >> clem, a note out today that real estate investors should now overweight some of the reits, some of the hotel owners. specifically because they believe this cycle for the hotel industry will last longer than the previous cycle. in other words, there's so little extra supply of hotel rooms coming onto the market, that demand and returns can keep going for three or possibly four more years, which would not have happened in the past. would you say that is accurate? is that what you see? is that what you forecast? >> that's very consistent with my observations. i know new supply into the market for hotels has been very, very limited for the past few years. the forecasts don't show it growing that much. i can tell you the rate gains, the average daily rate gains over the last couple of years for holiers and what we're

seeing for this year so far are healthy. i would support that statement, yeah. >> good to see you, clem. thank you very much for joining us. >> thank you very much. >> thank you. watching one fast food chain getting hit today. let's send it over to brian shactman. >> already three times average daily volume for cmg chipotle. rising costs means lower earnings. below consensus for the fourth quarter. still down more than $15, more than 5%. of course, back in october, david einhorn recommended it as a possible short. the stock down about 20% in the last year. used to be a major league darling. now it's a tough one to buy. carl, back to you. >> that's going to be one to watch all day long. thanks, brian. the inauguration for the president's coming up this monday. but what about the number of wealthy in attendance this time around? robert frank will take a look at the number of jets scheduled to fly in. you might surprised at his

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the president nal inauguration, many of the rich may be staying home as robert frank explains here at post 9. >> the presidential inauguration is usually the parties of the year. especially for wealthy political donors. but this year, many of the super rich will not be going to washington in quite the same numbers. i looked at private jet flights scheduled to land in d.c. around the inauguration. i call it the jet set popularity index. obama's 2009 inauguration set an all-time record for jet set popularity. almost 700 jets landed in washington at dulles and reagan national. this year, well, it's fewer than half that. about 300 jets scheduled to land

at dulles, and around 10 to 20 at reagan. the metropolitan washington port authority said obama's jet set popularity has fallen by more than 50%. granted, the whole inauguration this year is smaller this time. it's not the big historic event it was in 2009. during these budget cutting times, having fewer private jets fly to washington may not be a bad thing. but it is no secret that obama is less popular today with the super rich. congress just raising their taxes. and two years ago, he personally called for an end to tax breaks for private jet owners. it's no wonder some of them are keeping their jets at home this year. read more on cnbc.com. >> is it possible they're just taking a delta shuttle? >> maybe. but they kind of are voting with their tail fins this year. what's interesting is obama is on the one hand saying the rich need to pay their fair share, but also raising more money from the wealthy in this inauguration

than last time. last year he had a $50,000 cap on what you could contribute to the inauguration ball. this year he's asking for $250,000, up to $1 million from corporations to contribute to the fund-raising. >> for the event itself, what is the total budget? >> it's around $50 million. >> i remember in '09, how many balls were there, nine at least? >> yes. >> this year there are two. >> it's a much smaller event. some of the hotels in d.c. have interesting promotions. the madison hotel has four nights' stay at the presidential sweet, shopping tour and a dedicated social media butler. dedicated social media butler. this is someone who will follow you around and tweet, and pinterest, and facebook, all your events, as you go to all the balls. so that way when you're with the president, you do your -- rather than doing this, you know, you can say, jeeves please --

>> do you have to pay for him as well? >> $47,000 package, which includes social media butler, does not include tickets to the ball. >> wow. >> that's extra. >> brooks brother doesn't seem high end enough for $47,000. >> they'll probably be shopping somewhere else. >> have a great time. >> i wish i would. i won't be going private jet if i do. >> thanks, robert. >> thank you, robert. >> next on the program, a longtime apple shareholder will weigh in on the company's recent slide. we'll ask him, is now the time to double down. ♪

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welcome back to "squawk on the street." breaking news from the energy department. crude supplies in the last week fell by 950,000 barrels, down by 950,000 barrels. meanwhile, gasoline supplies increased by 1.9 million barrels. gasoline supplies up by 1.9 million barrels. fuel supplies increased by 1.7 million barrels. but the key number of that, a lot of analysts and a lot of traders have been watching is what has happened to the supplies in the middle of the country, in curbing, oklahoma. there we saw an increase in supplies. this is a key number traders are watching. we did have the expansion of the seaway pipeline taking crude

supplies from cushing, oklahoma. those flows started on friday. that pipeline was shut for most of the week so we don't have a full accountability in this week's number. traders are watching where the flows are going and what impact that is also having on utilization which is down about 1.2% for the week. we actually are looking at the markets. we're seeing a little bit of increase in the crude oil prices, wti contract, just above the 93.50 level. we'll continue to see what happens in the gasoline markets. that has rebounded a bit because we did see a much bigger supply increase in gas and supplies, reported by the american petroleum institute yesterday. and so this is not quite as great. we are seeing a rally here in gasoline futures. we'll continue to watch what happens here with the crude oil price, though. and with the situation in cushing. this is what traders have been paying closest attention to here on the floor. >> thank you very much, sharon epperson. a little over one hour into trading.

three california companies are bucking the blue chips downtrend. shares of constellation brands hit an all-time high. up more than 80% in the last 12 months. the home build er sentiment unchanged. shares of apple worthy of your attention today. back to 503, of course. yesterday, the stock did dip to its lowest levels since february of last year, at 483.38. have we actually seen a bottom in apple, and how do you play it now? channing smith is manager of the capital advisers growth fund, longtime apple shareholder. good to see you again. >> thank you, carl. >> what have the last couple of months been like for you? >> it's been painful. apple is a big holding in our portfolio.

investor psychology.watch back in september apple could do no wrong, and today they can do no right. we think the latest move in apple is a little overblown. most of the focus is on margins and deteriorating margins. the street wants to call the turn for margins. you have to understand, this is the greatest, largest product refresh we've ever seen for apple. margins will take a hit. we think we've probably seen the lows for margins in the near term. guidance about 36. we think we'll see that rise back into the low 40s. we think the earnings call next thursday will restore investor confidence. we're looking for a couple things. if you get any type of the -- the early rally, we want to see some type of shareholder rally with the dividend, share buyback, and we need to see guidance on gross margins. and we think we'll probably see a bounce in the stock, and you might have put in the lows yesterday. >> channing, there's a debate about apple. some believe the last $200 has

been an illusion, nothing's changed, the company is just as healthy as it was. others would say component orders, other empirical metrics about the popularity versus samsung have changed dramatically. what's true? >> i think there's a combination, you know, of both, carl. i think what you saw was probably back in september, the stock got way ahead of itself. today i think the pessimism is, you know, too great. i think probably the stock is a fair value, around 600, 600 to $700 range. keep in mind, this is a technology company. as we move along the technology cycle, competition is going to come in. google's android and samsung are very formidable competitors. this is going to continue to happen. we'll see margins deteriorate at some point. that's the debate. when do you see those margins start to fall off. we don't think that's right now. >> we've seen it, channing. we've seen it. margins have peaked with the iphone 3gps.

it's a decline we've seen for months and months. it sounds like your sentiment has also changed. even if it's just the margins, at what valuation do you think apple should be trading right now? it's not the valuation it was trading at when it was $700, according to what you're saying. >> the valuation is extremely cheap. we're trading at ten times. take the cash out at 7. keep in mind, the earnings growth should be close to 20%. compare that to any tech company in the technology sector, or overall market and there's a big disconnect. we think the earnings growth trajectory for apple is extremely attractive. we think they can at least grow at 15. but the stock needs to trade much higher. we think it will. we disagree with you on the gross margins. we've seen gross margins fall off. as these new product cycles kick in, and you start to see some of the economies to scale, we expect the gross margins to rise. we'll start to see that probably in this next year. we expect gross margins to peak

out in the low 40% range next year. >> let me emphasize what you're saying about the valuation. cash 6.8% of 2013. eight times next year's earnings. why do you think that it is so severely depressed to this level? and yet still so unloved by the market? why do you have this level of pessimism do you think at that valuation? >> well, you know, i think there's a lot of things. i think the law of large numbers is a big concern for investors. we've seen that in the past with tech companies like sisco and microsoft. where they lose that luster. i think a lot of investors are concerned about that. we would argue that, look, apple is the greatest technology company we've ever seen. there's still tremendous growth. we've never seen a cycle like technology mobile net. this is a category that will

still grow 30% over the next year or two. we think apple will continue to grow earnings at 20%. and the valuation, you know, has nowhere to go but up. one of the keys we'll be watching is gross margins. if the street is right about this turning margins, we see them decelerate, then it's a different story. we just don't buy into that yet. we think the product refresh has put a huge impact on downward margins. next thursday will be a big day, we'll see. >> channing, finally, the second largest weighting in your growth fund. are you adding, subtracting, at what levels would you be aggressive buyers or sellers? >> we added in the $500 range. we're looking at it again. it's still a very large percentage of our portfolio. but we would tell investors to be buyers here. we think the down side is limited. and if they can even meet expectations or beat it slightly, we think you'll see a big pop in the stock.

our price target came down from $750 to around the $650 to $700, which is reasonable until investor confidence can be restored. >> we'll speak again, i'm sure, after thursday, channing. thanks a lot. >> have a good week, guys. >> you, too. is the flu epidemic getting worse or could it finally be peaking? we'll get a check on whether consumers are still snapping up over-the-counter drugs. the north american vice president of personal care at procter & gamble. stay tuned.ns. i need to rethink the core of my portfolio. what i really need is sleep. introducing the ishares core, building blocks for the heart of your portfolio. find out why 9 out of 10 large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus which includes investment objectives, risks, charges and expenses. read and consider it carefully before investing. risk includes possible loss of principal.

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welcome back to "squawk on the street." i'm courty reagan live in miami. the icr retail conference, perhaps clarification to some of our viewers. we just spoke to lu lulemoulemo ceo. she tells us that they will not do promotions. i think some of her words were a bit misubd. she said the consumer is indeed changing and they need to up their game. but they will not be

participating in that promotion game that the competitors are doing. some of those comments that she made previously about upping our gain we believe were misinterpreted by the markets. we just spoke to christine day and she clarified that for us. melissa, back to you. >> thank you very much, courtney reagan. across the country people are flooding drugstores for over-the-counter meds to help ease their pain. are they having trouble keeping up with demand. the vice president of north america procter & gamble, great to have you with us. >> thank you. thanks for having me. >> i would imagine the stuff is flying off the shelves across the country. >> yeah. cdc says we're on a ten-year high flu season. we're seeing widespread activity across 47 states. and retailers are seeing record demands for these products. so vick's day quill, nyquil, as

you might expect, the cold and treatment brand is seeing great demand. >> i don't want to cause a panic out there, but is there any risk of any of these items out of stock and short supply? >> it's going to be a miserable for a consumer to get to the shelf and find out this isn't available. the good thing about vick's, nyquil, they've been around for 120 years. they're iconic brands. we've got a lot of experience in previous flu seasons, and another peak within the cold season. we've got a very responsive supply chain. we've got a great partnership with our retailers. we see their data realtime in terms of their inventory on their shelves, in their warehouses and we're able to flex our production. we're actually seeing great in-store available on vick's. we expect to continue that through the season. >> raiding between the lines,

you've managed to keep up with the very, very brisk, perhaps record demand by ramping up your production of these items? >> well, as we go into the season, we do this every year, we build inventory for several months before the cold and flu season. exactly for this reason. it allows us to be responsive and meet consumer demand. they go into these stores, the number one pharmacy recommended brand, has got to be on hand. it's not acceptable to our consumers not to be in stores, not to be on the shelf when they need it. and we've been able to meet that. we continue to carry good inventories. we continue to have great responsiveness with our retail customers. >> are you in talks at all with the cdc in terms of how severe the flu season might be? i'm just wonderi if the inventory prior to the actual flu season was any greater than in past years? >> we are -- we monitor the season very carefully. we're in daily, hourly contact with cdc to understand the

trends across the country, understand which particular cities are spiking. and that allows us to manage the inventory. so sure enough, as the season goes on, we'll see some flex in our day's forward coverage on inventory. but we're carrying weeks and weeks of stock to make sure that these products are on hand. i mean, you know, tens of millions of families are reaching out for vick's at the moment. we have to be on hand. this is a product that gets them through the day. we're in stock. we're on shelves and we'll continue to see that. >> patrick, thanks for taking the time out to talk to us. it's probably a pretty busy season for you. patrick lockwood-taylor. the mover within the financial services space. brian shactman? >> up on heavy volume, 11% actually floating at one pointed with a new high. basically they're going to create a new company and contribute at least $100 million to its money-losing mortgage

unit. positive here, and a huge pop in the stock. back to you, simon. >> thank you very much, brian. still ahead on the program, republican senator johnny isakson, for everything from the debate over the debt ceiling, to gun control, as we await the president's proposal in a live conference. more on "squawk on the street" right after this break. ♪ [ male announcer ] when we built the cadillac ats from the ground up to be the world's best sport sedan... ♪ ...people noticed. ♪ the all-new cadillac ats -- 2013 north american car of the year.

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let's get to the cme group on a wednesday morning and go to rick santelli. >> i find it fascinating, first of all, i think gold bugs outnumber pretty much every other type of bug when it comes to trading. so the story about germany and the gold, and the u.s. holding the gold, and how it's going to go back, is a story that just has the floor abuzz. it's one of those big stories. a lot of good humor associated with it as well. but i'm not looking at it from that vantage point. you know, there's been many tweets already as to the motivation. and of course, the conspiracy theorists are coming out in full force. but let's look at exports. one topic that we know is real,

is the depreciation going on of the yen through various programs that they certainly seem various that they certainly seem to be jumps in the fray. whether it's called quantitative easing, monetizing. we now see japan is really trying to stop their malaise of well more than a decade and a half. so it's all ant exports. even though it's oversimplified to say that when you weaken your currency you're going to strengthen your export market, there's obviously a lot of logic. there's also a lot of ways to slice and dice the numbers. so some of the numbers i'm going to be looking at are from the cia world fact book. considering we're just into 2013 a lot of the data i have on exports is as of january of 2012. it's really 2011 tdata. we're going to get update soon. here's what i'm looking at. 2012 first, the biggest exporter is china. close to $2 trillion. germany, arnt $1.4 trillion.

in japan, about .8. look at where they were in '06. about $650 billion for the japanese. germans about $1.1 trillion. you can see the growth in germany has been rather st substantial along with china. but how are the exporters in germany at a time where they are definitely the engine that's pulling all the heaviest weight, how are they going to deal with their own economy slowing a bit? the countries in southern europe we could argue about stabilized funding. really is story is about growth just like with our debt ceiling. it's not about how you go about the messiness to fix it. it really should be about the debt ceiling itself. i'm sure the germans are particular. they had a good 2012. i expect these numbers to go up a bit. i look at german manufacturers

like mercedes benz, vovolkswage. japanese exporters like nissan, toyota. i think the battlefield first and foremost is going to be on the war side on the export side. remember, japan achbd germany, the percentive of their exporting that figures into their total economy is so much larger, for example, than the u.s. our numbers are reasonable and our growth is substantial. we went from 1 trillion to basically 1.5 trillion. the point is they are great trades out there. the traders op these floor now have more spread on currency cross charts in their folios to get ready to strat jaegize. there's a lot of hedging. this is something to watch. when the 2012 figures come out we are going to look at them apd we're going to try to gauge exactly how much of a foreign

exchange trigger. is it going to be 1.20 versus the euro/yen? there's going to be softening of the euro. cutting ceo jamie dimon's pay. that brings dimon's total compensation for 2012 to a mere $11.5 million. down from $23 million a year before. we are asking with 11.5 million bucks less in his pocket how might dimon tighten his belt. sweet us@squawkstreet. some of your answers straight ahead. [ male announcer ] it's simple physics...

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visit celebrex.com and ask your doctor about celebrex. for a body in motion. we're watching shares of research in motion move sharply higher this morning. over to seema mody sfwl we're looking at research in motion shares moving sharply higher as you mepntioned. i spoke to app analyst who says it's rising optimism ahead of the blackberry 10 laumplg on january 30th that's helping shares outperform in today's trade. also there's a blog out there that claims it's gotten a copy of the sales training manual for the blackberry 10 device. that, perhaps, shedding some light -- more light around what

the blackberry -- the new blackberry will entail. also, perhaps, shedding some light on functionality that it will incorporate. cnbc cannot confirm this. i did read that's wone of the reasons we're seeing shares trading higher. >> jpmorgan chase cutting jamie dimon's pay by 50% to $11.5 mill yop down from $23 million a year ago. it bripgs us to this morning squawk on the tweet question. with $11.5 million less in his pocket how might jamie dimon tighten his belt? market action rights, okay, maybe om one beach maynor in south hamp top. corn dog writes jamie can tighten his belt by using fewer paper towels and finish the ketchup before disposing the bottle. robert writes, perhaps he could light his office with whale oil. >> ooh. >> a lot of snark out there today. what's coming up tonight? >> a big show. two different strategists with

very different outlooks on the market. gary schilling calling for a 40.2% decline in stocks. barbara marcin. at this point the question is, did he actually bottom tip the stock as we are seeing the stock move higher in today's session. >> the barn door. a lot of discussion about the barn door. david, any news on dell? potentially within two weeks? >> you're always estimates. it seems at least they are fairly far along in this process. a process that actually began this summer in terms of the company looking at potential alternatives to try to create value. i think they want to, especially given the leaks, get it done or dead in the relatively near future. should point out, shares of gm quite weak. down over 5% now again this morning. >> we've had some very bad new car remg strags figures for western europe. a really bad forecast it'll fall

again 5% next year. >> before we go, david, i wonder. it's proenl unfair to ask you. would it be your guess if this happens they go public again one day? does dell eventually buy the whole thing out? >> no. eventually you need an exit. you do look for an exit down the road. conceivably given the strength of the cash flows that the company would pay significant divide dividends. there's no doubt. exit is part of the strategy overall. yes, dell would become a public company again conceivably down the road. >> see you a little later on. see you to want. if you're just joining us, here's what you missed earlier on this morning. welcome to hour three of squawk op the street. here's what's happening so far. >> this congress has never approved any of the money that is going to be spent. so congress has not rung up those bills. and the money hasn't been spent

yet. >> they've got to get serious about doing the hard work that has to be dope on both sides of the aisle to deal with the specifics how how you get this done. >> when dodd/frank happens, oh, boy. this is going to kill them. i'll tell you, mr. dodd and mr. frank, you want to be mr. goldman and mr. saks. they're killing it. >> i know they can solve this. i keep telling myself every day. first you have to come clean and say we have a real problem. yahoo!. why would yahoo! not take a page. yahoo! should do the same thing. become public and next thing you know, you're facebook. anything that aligns employees with word of the shareholders is a good thing. unless a lot of other firms do the same thing it could be problematic for morgan stanley. we do think it's a move in the right direction. >> any any given night in the

u.s., a full one-third of hotel rooms are empty. and hoteliers have every incentive to fill those rooms on a given night. they're often willing to discount to do so. good wednesday morning. we're live here at post 9 at the new york stock exchange. markets are lower today for the first time in five, actually, for the dow. down 44 points. s&p down 2.5. nasdaq holding on to a slight gain. ant 2 1/2 points. apple bouncing back a bit after big losses earlier in the week. stock's up more than 3% despite a downgraded pa sichk crest. piper jaffray reiterating overweight on apple saying the demand for iphones was actually strong through the holiday. chipotle one of today's biggest losers. higher food costs. chipotle also saying marketing and promotional costs were up for the third quarter. the road map. two big banks reporting results today. jpmorgan saying it is near the

end of the london whale fiasco. jamie dime p takes a 50% pay cut. boeing, the dreamliner grounded by two major japanese airlines. what you should be doing with that stock. apple bouncing back. still down more than 20% over the last few months. could this actually be the bottom? and the new part of dodd/frank that could cut nearly half of potential home buyers out of the market. one senator who says it can ruin the american dream. we begin with financials. sector trading higher today. jpmorgan out with results that easily beat. the big bank earned $5.7 billion in the fourth quarter versus 3 ppt $3 billion a year ago. jason goldberg is managing director, senior equity analyst covering banks with barclays. welcome back. >> thank you. >> how impressive today? >> results were good. jpmorgan's numbers were pretty much in line with our expectations with exception of loan loss provision which came in better than our forecast as

credit card apd metrics continue to improve. >> is this is a mortgage story or is there -- is it more complex? >> i think it's a bit more than that. mortgage results continue to be strong. elevated refinance activity amid low interest rates. but loans grew from the prior quarter. you've seen several consecutive quarters of increased loan growth. asset management had a good quarter. commercial banks had a good quarter. actually, trading revenues while down from the third quarter outperformed our expectations and were up double digits from a year ago. >> you talk about the outlook. you call it a very high level outlook. they're citing a number of thipgs. ochbl low rate pressures nearing the end of credit card reserve releases. i know you got an overweight on the stock. but how positive do you see the year turning out for jpm? >> we think you'll see several metrics in the right direction. here's a company that continues to take market share in the majority of businesses it chooses to compete in. it's fwrgrowing the top line ap growing the bottom line.

2012 was the third straight year of record earnings. we look for continued growth into 2013 with a 15% plus return on tang nl common equity. not too bad. >> everybody, of course, jason, today is talking about the review of the cio office. are you satisfied with what they found and is this going to be even an echo story in the coming quarter or the quarter after that? >> no. i think we're done. i think their disclosure around this topic is, you know, beyond any other incident i could ever think of in my 17 plus years covering the industry. i think they've beaten this well to dead. i don't expect we'll hear from it going forward. >> is dimon -- there was so much discussion, a lot of it uninformed, i might add, about what his compensation would say symbolically ant his tenure, his legacy, his standing on the street overall. is a 50% pay cut deserved or

not? >> you know, here's a company that still put up record earnings with a 15% return in tangible common equity ratio in 2012 despite the cio -- it's navigated itself through the financial crisis almost better than any other large financial services company. if you look at their stock price sips he's joined, it's outperformed the market as well as, you know, the vast majority of other banks i cover. i think his record speaks for itself. >> jason, you don't cover goldman. since they're technically considered a broker. but on your list of -- in your universe, in what percentile is jpm jversus some of your other favorites. >> jpmorgan is a favorite in 2013. citigroup which reports tomorrow is another name we like in here. u.s. bank which also reported today had a pretty solid quarter as well. >> finally, we've talked so much about compensation in general. whether it was out of goldman or obviously the stories regarding morgan stanley bonuses over the last couple of days.

have we reached a level where ratios, at least, are going to stabilize, go higher in coming quarters, stay low? >> i think you've kind of seen an adjustment across the industry. you know, some banks have kind of been stable. other banks have upper ends bring them in. i think we're kind of approaching the new normal from a ratio standpoint. you kind of reset the base and hopefully as revenues grow compensation follows. >> yeah. we knew the new normal was coming. this is apparently what it looks like. jason, thanks so much. >> thank you. >> jason goldberg from barclays. brian shactman with a market flash. >> a lot of discussion about facebook's graph search. what other companies it might affec. p a lot think it might affect yelp. a lot more downside pressure according to northland from here. down 3%. back to you. >> after a tough day yesterday. thapgs a lot, brian. capital marngts op-ed.

gary kaminsky wapts to talk about whether or not there is a bond bubble. gary, good morping to you. >> carl, good morning. much like the question is the earth flat or round? is there a bond bubble? you can't go anywhere and not hear it. run into a ceo of a publicly traded reit. same restaurant. the whole discussion is about interest rates. there's a difference twebetween buying a bond. very different when you buy a bond fund. much more sensitive to interest rate. i want to show a couple of pictures here. first thipg i want to show, tom mcclellan sends great stuff. fortunately over the weekend he sent me this. every friday the cftc releases the commitment of traders report. what this basically shows is the difference between what is commercial or the really big

firms' net positions in terms of treasury notes as well as what are large speculators, noncommercials. the point here according to tom is you're looking at dumb money and smart money. bottom line here is very simple. the crowd has tipped far too much in one direction. the dumb money, speculators, much like they did a year ago, much like they did two years ago are betting on a major correction here in interest rates. too many people in that area in the short term. not to seem surprised no matter what happens in terms of economic growth or erpings or whatever, too many people short treasury notes right now. here's the point. most people think it's one or the other. stock prices go up or bond prices go down and yields go up. you know what? most people think the scenario for 2013 is we could be living in a world where we get no movement in terms of interest rates. in fact, yields stay right where they are. bond investors keep in their seats and don't sell the bonds.

equity prices go up. i agree with that scenario. i want to show you a chart. i know you viewers love these long-term charts. this comes from asset management. take a look at the annual 10-year return back to 1937. see where we got down to in terms of 2008, 2009. see where we are right now. see the trend is your friend. annual returns in terms of stock market returns going higher. my point here is very simple. even equity bulls, such as the author of this report who joined us last year on the show, says the following. this is, indeed, the best of times and the worst of times. there's a strong case of risk appetite to increase going forward which would benefit today's long-term investors in the equity markets. there's also a need to remain cautious as the system still had not completely recovered from the excesses of too cheap credit. there's not a bond bubble if you're buying bonds and you know what your expected return is. there is a bond bubble if you are a retail investor just

buying a bond fund and you're not willing to accept the fangt that in the next several years you could wake up some day and get a significant shock when you look at the price of that fund. major difference between buying a bond and buying a bond fund. we've detailed it for some time. bottom line here, short term, even with stock prices up as i think the next two to three years, 10% to 12% total return, bond prices could actually move in the same direction, that is prices up and yields down. that's the consensus opinion i hear as i talk to the smartest investors out there, carl. >> that is really interesting, gary. you've done so much to try to educate our viewers as to how those -- how those thipgs work and how they're different. we'll come back to you in a little bit. more problems for the 787, of course, pushing boeing into the red today. off the lows. when and how should the aircraft maker step up its response? we'll take a look at that next. first, rick santelli is working on something for later on in the hour. hey, rick. >> good morning, carl. we're going to stick with our theme ant exports and currencies

and depreciations. chief economist at the cme group. that's all coming up in 10, 12 minutes. if you're an fx cross trader you don't want to miss this one.

the problems keep coming for boeing. nippon airways saying a dreamliner made an emergency

landing in japan today after battery problems and a burning smell was detected in the cockpit and cabin. they're grounding dreamliner fleets. phil lebeau has been on this story from the very beginning. >> the problem for boeing investors is we've seen a slew of problems when it comes to the dreamliner. this is just the latest. go back to november. that's when the first united commercial flight was in the u.s. boeing stock was moving higher. there was a lot of anticipation about the dreamliner. then the problems start. december 4th an emergency landing. cutter airways on december 9th reports a faulty generator on a dreamliner. on the 14th united grounded a second dreamliner. last week things really picked up. last monday you had a 787 from japan airlines catching fire at logan airport. the next day another japan airlines dreamliner reported a fuel leak. then on the 9th ana out of japan grounded a 787 due to a brake

issue. yesterday the flight in japan making an energy landing. with regards to that emergency landing, after that landing ana and japan airlines both said they are going to ground their 787s basically because they want to check out exactly what's going on. both have now had problems with the battery in their planes. the faa, the ntsb and boeing all sending investigators to japan. as i mentioned with regard to this flight, here's what the ntsb just put out in regards to this emergency landing. it says the crew received multiple messages in the cockpit concerning the battery and systems that were affected. also reported smoke in the cockpit and an odor in the cabin. we've been talking about the lithium ion batteries on the dreamliner. they're made by a company out of japan called gs yuasa. down 9% in the last week. look at that chart. that's the indication the pressure gs yuasa is under as they figure out what's going on with the lithium ion batteries. >> phil lebeau in chicago, thanks so much. the question is, is it time to ground the boeing 787 for

good? the vice president of the teal group corporation joins us on the phone. good morning to you. >> good morning. >> should this plane be in commercial service right now in the u.s.? >> right now the regulators are doing their jobs. they're looking at the pattern that has emerged of systemic glitches. right now there's nothing that says it should be grounded right away. there are certainly issues. but one unusual aspect of this program is that so many planes were built before -- service. we're getting reports of glitches from an awful lot of aircraft and an awful lot of flight hour. in other words if you typically took a program, entered it into service when you had six or ten planes built, it would be a very different story. but in terms of glitches there would still be quite a few in relative terms. >> so you think it's not the number of glitches per se that's the issue, it's just that we have so many of them already in service? >> yeah. that's a big part of it. even worse a bunch of aircraft

that were built before lessons could be learned about getting the plane into service. all of this adds up to enormous cost, expense and a major image headache. it could be that you'll see more groundings. it's quite possible if there are more incidents. but none of this points yet to an aircraft that is fundamentally flawed. we just haven't seen that. >> obviously we know nothing officially at this point. the reports have regarded things like the battery. phil mentioned the fuel leak. there's even been reports of cracks in the windshield. do you believe the real issue is the battery? >> i don't think there's any way of knowing right now. it could easily be a wiring issue associated with the battery. after all, you had 50-something planes built up front prior to certification, prior to entry into service. part of the problem might just be that there was never really a methodical cadence that emerged in the production line with all the usual defect elimination and all of those other things you associate with a modern assembly

line. so it could be that. if it is a battery, that's going to create even bigger headaches. of course, with a more electric architecture you need a very powerful battery. >> you're not a stock guy. you're here to talk aifonics. i do want to read from this report goldman wrote today. they said the problems with the batteries, the issue overlaps here, in their words, heightens the risk of a potentially more meaningful required change to the aircraft and therefore a possible delay in the pace of the production ramp. do you think that's likely? that they're going to have to make some changes where they just can't crank these things out as quickly as they want? >> i think there's a very good chance of that, of modifications being needed to either the design or the production line. those are the two buckets that you'd put these under. either you've got systemic production problems in which case you need to look at your line and how the work flow is going. or you've got systems issues. in which case you might need engineering changes which could also slow down production. no question there. >> finally, richard, the

japanese transportation minister today said this is in his words a serious incident which could have led to a serious accident. the japanese transportation minister not at all what ray lahood and the faa said in their press briefing last week. do you think regulators in the u.s. are behind the eight ball? >> well, of course, this hadn't occurred when they came in with their statement. this does certainly ratchet things up a notch. there's no question. obviously, the regulators at the ntsb really have their work cut out for them at this point. they've absolutely got that going. the japanese were the launch customers. both jal and ana. still, we're talking about a lot of planes. and the image of an aircraft that has just entered service. >> the image of those emergency chuts on the covers of the paper today are not helping matters at all. thank you so much for your time. >> pleasure. >> joining us from the teal group. just as housing starts turning the corner, there's now

a new rule that could shut out 40% of potential home buyers. we're going to talk to one senator who says it could return the american dream of homeownership. what he's doing to keep that from happening. we'll ask him about the debate over gun control and the debt ceiling ahead of the president announcing his proposals on gun control just before noon today. what are you doing? nothing. are you stealing our daughter's school supplies and taking them to work? no, i was just looking for my stapler and my...

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darn right, let's go. let's go to chicago and get the santelli exchange. >> we'll keep the theme exports. the japanese great depreciation. our guest, chief economist at the cme group. blue, welcome. let's start at the beginning. what do you think of the great japanese depreciation. and tell me why do you think it came about? how did it come about so quickly? and what are some of the

consequences both intended and unintended? >> people all over the world like to give the japanese advice. they've been telling them to do this for 20 years. ben bernanke wrote a paper in 1999 telling them to do this when he was at princeton. so they're doing it. they're going to weaken the yen. the prime minister wants. the minister of japan wants it. the prime minister can appoint a new head of the central bank. >> right now we're around 80.5 dollar yen. when i was reading your research you wouldn't be surprised to see 1.20 in dollar/yen. that would be 1.40s in euroyen. >> they need at least a 20%, 25% depreciation. even then it takes a year and a half to make it happen. 10%, that's normal exchange rate volatility. that's like nothing. >> where are the battlefields going to be? let's assume we're in the early part of the yen depreciation.

even though no market moves in a line. there'll be some bumps along the way. what are the germans going to think? what are the russians going to think? let's talk about the other countries' perspectives. >> russians told us this morning they don't like currency wars. interesting. >> more from an energy perspective. >> they're like an energy syndicate. they're worried about that aspect of it. the u.s., we're as committed as the japanese to zero rates and quantitative easing. we're pretty much in their camp. europe has so many other problems, they're going to keep their rates near zero. they're not going anywhere. basically the u.s., the uk, japan and europe at at zero rates plus some quantitative easing. if we ever get a risk on market, you don't want any of those currencies. >> basically it's like jumping out of the airplane of trying to do damage to our currency in ways that we think are going to fix our economies. but it's almost like a group insurance plan. it's not like one country -- by having everybody together, if it all goes haywire, somehow i think they still all emerge and stay largest economies of the world.

>> if you're in the club, yes. what about the countries not in the club? like, say, brazil or mexico? their currencies could go up. they're going to end up cutting rates equal to their inflation rates, maybe lower. india might even cut rates. all the currencies with a pulse, interest rates above 3%, 4%, 5%, they're going to be the favor carry tray if we get a risk on market. >> that makes sense. when you look at it from another vantage point, if the 10-year jgp right now is hovering around .75%, you're talking about how it would be impacted with inflation and rates, they have a long way to tup side before they have to worry when you start out at .75%. >> they certainly do. if they get depreciation, if they get inflation, then they'll destabilize the jgb market which is 200% of their gdp. i wouldn't want to destabilize that. that's the unintended consequence. >> that's the unintended consequence p look at jgb rates as the currency weakens. carl, back to you.

thanks, blu. the last three months have not been kind o apple investors even with today's bounce back. we'll find out if they're finally thinking of selling. bells across europe are about to ring. we'll get the close there. talk about how it might impact us here in the states in just three minutes. try running four.ning a restaurant is hard, fortunately we've got ink. it gives us 5x the rewards on our internet, phone charges and cable, plus at office supply stores.

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a bunch of new factors and indicators today showing us just how weak the european economy is.

i couldn't get over the car numbers sfwl germany having the growth forecast for next year 0.4%. still working our way through a much poorer economy in europe. >> the european markets are closing now. >> carl mentioned what was happening with the automotive data that came through today. in fact, there was an 8.5% fall in car sales in western europe last year. that takes it down to a 17-year low. and still the association of motor manufacturers in western europe is forecasting a further 5% decline for 2013 in new car registration. those car makers that are mainly focused on europe and are not so diversified, say, to the united states for car sales or to china, they've been hit to a greater extent. peugeot of particular note. dow jones has reported pushback from some of the big economies on the new rule of the banking

union and that perhaps the safety net funds will not be as readily available to recapitalize the banks. certainly not directly recapitalize the banks without going via governments first of all. meantime italians are racing to get as much debt out as they can at this very buoyant level of italian bonds at the moment. they sold 6 billion euros of 15-year paper money today. the.84 as you can see -- i beg your pardon. i thought we were going to look at the 15 year. the other thing we should mention is the euro. rick santelli was talking about this whole debate over currencies. the french as ever are trying to get a debate going in europe about the strength of the euro. bear in mind since -- since draghi said he would do everything to save the euro on the 26th of july last year, you've got a massive 9%, almost 10% appreciation against the u.s. dollar. the head of the euro group who's

actually from luxembourg joined in saying it was dangerously high today. they're still getting no traction with the european central bank. one of the governing council members seemed to shrug off concerns about the euro. unless you get the central bank on board in an effort to weaken the currency, you're probably not going to get very far. >> 1.33. that's amazing to watch. look at that chart. time for a check on energy and commodities as well. sharon epperson is at the nymex for us. >> u.s. oil prices are continuing to climb here above $94 a barrel. this is after the energy department's report showed a big surprise. a decline in crude supplies in the past week when most analysts had been expecting an increase of somewhere around 2.5 million barrels. we saw a slide of nearly 1 million barrels. normally this time of year we do see an increase in crude supplies after the inventories have been whittled down at the end of the previous year. it was a surprise to traders. many traders have been more focused on what was going to happen to the supply including oklahoma. the area in the middle of the country. the key delivery point for nymex

crude futures. we saw an increase there. it's still at a record level despite the expansion of the seaway pipeline. so we are seeing bits of a surprise considering the level in curbing, oklahoma. we're seeing wti futures above the brent crude futures right now in terms of the gains. back to you. >> thank you very much. sharon epperson at the nymex. dow is down 21. bob pisani is here to tell us sort of broadly where we are. >> here's the problem. we're in a range, i mean a really narrow range. we've been in a 50-point range for at least the last four or five days. the dow normally moves about 125 points high to low on a day. but there you can see we're really going nowhere for quite a long period of time. let's move on. i want to talk a little bit about why we're weak today. the world bank notably lowered its growth forecast. 2.4% for the world. they had it at 3%. that's a big reduction. emerging market growth now only 5.5%. good eheavens. four years ago we were at 7.5%, 8%.

housing stocks, the nehb had its housing sentiment index out. it was stable at 47. that's good. tafs little below expectations. these stocks which were already expensive a little bit on the downside today. you heard simon talking about the weak numbers of autos for auto sales over in europe. gm giving a very muted outlook. profitability will only rise modestly in 2013. look at that. 5% decline in gm. the rest of the big autos are on the weak side as well. take a look at gold stocks today. i talked this morning about that article that got a lot of attention. a lot of people love following gold. that germany was repay treeuating part of its gold supply in the u.s. and france. here's the story. germany announced they're repay treeuating some of their gold here. a lot to do with the euro crisis and not that much to do with december tru distrust among central banks. germany wants more control over foreign reserves.

if they ever have to do that, that could be a big story. a crisis in the euro. but so far that's not happening. german gold in the u.s. only goes from 45% of their total supply to 37%. they're only taking a few hundred tons. if you're wondering who owns -- what central banks own all the gold in the world? take a look. put it up and i'll show it dwrou. this is the largest holders of gold by central banks in the world. by the country. u.s. being the biggest. 8,000 tons of gold we hold. germany, 3.4 tons. and, by the way, 3,400 tons. there have been calls for an audit of not only the u.s., but even in germany as well. central banks don't like doing it. i don't thipg it's such a bad idea if it can be done in a controlled manner. >> due diligence. >> but nobody's been doing it. hasn't been done in decades. >> that's incredible. a lot of gold. shares of apple back above 500 this morning.

503.75. are investors developing a longer term distaste for the stock? francesco gerrera, good to see you. you talk to a lot of people. i'm wondering if you're getting the sense institutions think the selloff may be anywhere close to done. >> i think there's two factors here at play. one is, i think, every good thing has to come to an end, right? the shares had run up a lot. a lot of people, institutions even, with an investor who had bought lower are starting to sell. simply because they want to lock in some gains. secondly there's a genuine concern about slowing growth in earnings at apple. remember, apple is cheap on a price to earnings ratio if you believe that the earnings are going to continue to grow at the pace they have been growing. so some people are starting to worry that maybe the "e" in the pe is not so real. there's genuine concern. i think we're going to see apple trade in a range and be somewhat

more fragile and more vulnerable than it has been in the past. >> yeah. that would be easy to envision. are there price levels where you think big players might be more -- their appetite may be whetted? we keep hearing somewhere in the 400 to 450 range. does that sound familiar? >> i think that's always difficult because every player is different. they have different priorities. i think in that range you can see people dipping their toes back in. let's remember, apple is also a big part of a lot of indexes. so you have to own a lot of it especially in the s&p 500. also, of course wk in the nasdaq. you really need to be overweight or equal weight in apple for a lot of investors. you'll see stuff like that at that level. >> would you classify this right now as a growth or value stock? >> that's a biggest question in the market so far. so far if you think about it, so far apple has been both, right? it's been a growth stock for people who want to think about their stupendous growth. then a value stock to people who look at valuation. at the moment you're going to think it's more a value than a growth stock. but the good thing about apple

is it could change again because of the dynamics of the company itself and its ability to grow earnings. >> and if it isn't a true value play, you would expect, at least, some mechanisms for returning cash to shareholders. which is why i think a lot of people are wondering if on thursday they're going to say or hint that capital will be used differently, right? that a dividend might be bigger? that a buyback, a transformational acquisition might happen? >> yes. except that, you know, you see this in a lot of very, very successful companies. they tend to be very stubborn. they think they can use the cash better than the shareholders would. i wouldn't expect a huge amount of return on capital to shareholders. maybe a hint they'll do something. the other thing about apple, it's extremely see kretive. they don't want to play their cards other than close to their vest. i wouldn't expect a huge transformational decision or announcement on thursday. >> yeah. thatsecrecy, we think wonder

ing ifth ing if that strategy changes. whether that forces them to change their marketing and communication strategies. >> if they are listening and watching i recommend they change it. i am biased, of course. until you're that successful, and we've seen it time and time again. ge, microsoft. these companies who are very, very successful. everybody wants to know about them. they really don't have any interest and incentive to come clean more than they do. i think apple will remain a bit of a black box for a while. >> they are listening, trust me on that one. >> open up. open up. >> we'll see you next time. thanks. >> thank you. let's get over to brian shactman and get a market flash here this morning. >> one comment from crocs means it's down more than 6.5% basically coming out and saying difficult holiday retail sales environment was the case for that company. they did mention that their revenue in q-4 will be in line with previous estimates. that's not enough to, of course,

placate investors today. that's a pretty strong number. down 6.6% on heavy volume. back to you, carl. >> thanks so much, brian. the president is set to speak at the white house on new gun safety measures. we'll bring that to you live in about 15 minutes. first we'll talk to republican senator johnny isakson who will weigh in not just on gun safety but the debt ceiling and what he says is a new challenge to the housing market. "squawk on the street" is coming right back. ♪ ♪ ♪ [ male announcer ] some day, your life will flash before your eyes. ♪

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coming up on halftime, blackrock's rick reeder. he's making a big call on stocks with $650 billion under management. legendary value investor bill nygren. his surprising top tech book. facebook, apple, boeinboein goldman. we're trading all of the day's top stories. federal regulators are looking to finalize a provision in dodd/frank that could shut out as many as 40% of potential home buyers and potentially slow the housing recovery. a new provision would require a down payment of 20% for high quality residential loans. republican senator johnny isakson of georgia ran a residential real estate company for 20 years. he's leading a bipartisan group of senators who oppose that provision. he joins us in atlanta.

senator, good to have you back. good morning. >> good to be with you, carl. thanks. >> a lot of people might say what's wrong with 20%. i paid 20%. walk us through why this is such a problem. >> historically in america, the down payment has been -- the insurance on down payment and quality has been a combination of private mortgage insurance or credit enhancement and down payment. 20% down is a large number for most americans. in fact, as you said, about 40% of the american buyers would be out of the market. and the worst thing is capital would shrink in terms of being attracted to the mortgage market. the whole reason this is a problem is the dodd/frank bill required a risk retention provision on mortgages. if the rule requires 20% down or else the bank has to hold 5% risk retention, that's going to shrink capital coming into the mortgage market. >> how are you trying to cut this off at the pass? >> we're trying to use the old definition which works just fine. that is use private mortgage insurance to insure that portion of the 20% that's not covered by the cash down payment. but require a down payment of no

less than 5%. so you always have skin in the game. you have credit enhancement in terms of private mortgage insurance to lay over that credit. >> yeah. that's sort of leads to the broader point. people may believe that in order to prevent us from going back into a crisis you want to see down payments at a maybe higher level than the past. you argue it was actually the poor underwriting that got us into trouble. not people paying too little on their down payment, right? >> that's exactly right. to the credit of the consumer finance protection bureau, mr. cordray, they just issued the qualified mortgage rule which put in standards for underwriting to return us back to the gold ole days of the '80s and '70s in terms of ratios that made sense. that was a great move by the fed. this move on underwriting and having risk retention would be a bad rule. because it would risk mortgage availability and reduce it. >> any projections on what it might do to average selling prices, sale of existing homes or new homes for that matter?

>> when you reduce demand it makes softness on prices. we've gone through a period of time of a great decline. we've hit bottom. we're beginning to come out in some markets around the country. if you pull 40% of the demand in a weak market out you go back and have a double dip in housing. that would be bad for the country and bad for the economy. >> changing gears a bit here, senator, the debt ceiling obviously getting the lion's share of attention in washington. although that might change at the top of the hour when the president talks about gun control. what is your projection on how this is all going to go down? whether it is an outright default, a shutdown of the government? do either of those things seem very likely to you? >> neither of them are good things to have happen. but the president is going to have to be willing to talk about spending. we addressed the revenue issue on the bill that we passed january 1st in the congress. we've now put the revenue issue to bed. it's time we put the spending issue to bed. we have to begin to cut our discretionary spending and reform our entitlement programs if we ever hope to reduce our national debt and get more in balance in this country. if you just continue to extend

the debt limit without restricting spending, you're going to have yourself where you have compound interest on negative debt which is wrong for the united states of america. >> finally, on gun control, senator, we'll see what the president says at the top of the hour. he is expected to lay out some legislative proposals, some executive steps to prevent gun violence. is it clear to you that either of -- anything of what he's going to propose will get through the senate much less the house? >> i don't think bans on weapons or bans on cartridges will get through the house or the senate. we did that in 1994. for ten years on assault weapons. columbine took place right in the middle of that. we realize the common thread running through these shootings are mental health issues. i think it's more likely to see a focus on background checks and a mental health registry rather than the second amendment. >> always good to talk to you. we'll be watching your falcons as well. can't imagine what that's done to your home state. >> the town is hopping. i can tell you that.

>> i'll bet. senator johnny isakson, thanks so much. >> thanks. as we said earlier, we are waiting for the president to speak on these new gun safety measures. he'll speak, e think, at 11:55 this morning in a few moments. first live to a gun store to see how new proposals might affect sales. we're back after a quick break. what are you doing? nothing. are you stealing our daughter's school supplies and taking them to work? no, i was just looking for my stapler and my...

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expecting the president to speak any moment here. unveils legislative proposals and executive steps to prevent

gun violence in this country. before he comes to the podium, though, let's go to eamon javers in washington with a preview of what the president will be saying. good morning, eamon. >> reporter: this is expected to be a tough political battle to get some of these measures passed up on capitol hill. also a battle that just got very personal with the nra yesterday releasing a television ad that accuses the president of being an elitist hypocrite for having children who are protected by armed secret service when he opposes armed guards in schools across the country. that drew a very tough response from the white house today. >> as you speak, the president is coming to the podium. introduced here by the vice president. >> before i begin today, let me say to the families of the innocents who were murdered 33 days ago, our heart -- our heart goes out to you. and you show incredible courage, incredible courage being here. the president and i are going to do everything in our power to honor the memory of your children and your wives with the work we take up here today.

it's been 33 days since the nation's heart was broken by the horrific, senseless violence that took place at sandy hook elementary school. 20, 20 beautiful first graders gunned down in a place that's supposed to be a second sanctuary. six, six members of the staff killed. trying to save those children. it's literally been hard for the nation to comprehend. hard for the nation to fathom. and i know for the families who are here, time is not measured in days. but it's measured in minutes. in seconds. since you received that news. another minute without your daughter, another minute without your son. another minute without your wife. another minute without your mom. i want to personally thank chris

and lynn mcdonald who lost a beautiful daughter, grace. and the other parents who i had a chance to speak to for their suggestions and for, again, just for their courage of all of you to be here today. i admire, i admire the grace and the resolve that you all are showing. and i must say, i've been deeply affected by your faith as well. and the president and i are going to do everything to try to match the resolve you have demonstrated. no one can know for certain if this senseless act could have been prevented. but we all know we have a moral obligation, a moral obligation to do everything in our power to diminish -- worked in this field a long time in the united states

senate, having chaired a committee that had jurisdiction over these issues, guns and crime. and having drafted the first gun violence legislation, the last gun violence legislation, i should say. and i have no illusions about what we're up against or how hard the task is in front of us. but i also have never seen the nation's conscience so shaken by what happened at sandy hook. the world has changed. and it's demanding action. it's in this context that the president asked me to put together along with cabinet members a set of recommendations about how we should proceed to meet that moral obligation we have. and toward that end the cabinet members and i sat down with 229 groups. not just individuals, representing groups, 229 groups from law enforcement agencies to public health officials to gun officials to gun advocacy groups to -- to sport sportsmen and hu

and religious leaders. and i've spoken with members of congress on both sides of the aisle. had extensive conversation with mayors and governors and county officials. and the recommendations we provided to the president on monday call for executive actions he could sign, legislation he could call for and long-term research that should be undertaken. they're based on the emerging consensus we heard from all the groups with whom we spoke, including some of you who are victims of this god awful occurrence. ways to keep guns out of the wrong hands as well as ways to take comprehensive action to prevent violence in the first place. we should do as much as we can as quickly as we can. and we cannot let the perfect by b t -- be the enemy to the good. some of what you hear from the president will happen immediately. some will take some time. but we have begun. and we're starting here today. we're going to resol f to continue this fight. during the meetings that we held we met with a young man who's here today.

i think collin goddard is here. where are you, collin? collin was one of the survivors of the virginia tech massacre. he was in the classroom. he calls himself one of the lucky seven. and he'll tell you, he was shot four times on that day. and he has three bullets that are still inside him. and when i asked collin about what he thought we should be doing, he said that -- he said, i'm not here because of what happened to me. i'm here because of what happened to me keeps happening to other people. and we have to do something about it. collin, we will. collin, i promise you, we will. this is our intention. we must do what we can now. and there's no person who is more committed to acting on this moral obligation we have than the president of the united states of america. ladies and gentlemen, president barack obama.

>> thank you. thank you so much. please have a seat. good afternoon, everybody. let me begin by thanks our vice president, joe biden. for your dedication, joe, to this issue. for bringing so many different voices to the table. because while reducing gun violence is a complicated challenge, protecting our children from harm shouldn't be a divisive one. over the month since the tragedy in newtown, we've heard from so many. and obviously none have affected us more than a families of those gorgeous children and their teachers and guardians who were lost. so we're grateful to all of you for taking the time to be here

and recognizing that we honor their memories in part by doing everything we can to prevent this from happening again. but we also heard from some unexpected people. in particular, i started getting a lot of letters from kids. four of them are here today. grant frits, julia stokes, hannah zeha and tasia good. they're pretty representative of some of the messages i got. these are some pretty smart letters from some pretty smart young people. hennah, a third grader. you can go ahead and wave, hennah. that's you. hennah wrote, i feel terrible for the parents who lost their children. i love my country. and i want everybody to be happy and